MEDICAID

CMS Should Ensure 

That States Clearly 

Report Overpayments

Report to Congressional Requesters

December 2013

GAO-14-25

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-25, a report to 

congressional requesters

December 2013

MEDICAID

CMS Should Ensure That States Clearly Report 

Overpayments

Why GAO Did This Study

While states and certain federal 

entities have had long-standing roles 

identifying Medicaid improper 

payments, the Deficit Reduction Act of 

2005 expanded CMS’s role in 

identifying improper payments. As a 

result, CMS created a national audit 

program, which uses federal 

contractors to audit state Medicaid 

claims and identify overpayments—

payments that should not have been 

made or were higher than allowed—to 

providers. States are responsible for 

recovering any identified overpayments 

and reporting the return of the federal 

share of those overpayments to CMS. 

GAO was asked to examine states’ 

efforts to recover and report 

overpayments identified by federal 

audits, and examine CMS’s review of 

state reporting. This report assesses 

the extent to which: (1) states 

recovered Medicaid overpayments 

identified by federal audits and 

reported the return of the federal 

share, and (2) CMS reviewed states’ 

reporting of Medicaid overpayments 

related to these federal audits. GAO 

obtained overpayment and recovery 

data from all states with an identified 

overpayment and compared this with 

CMS data; reviewed relevant laws, 

regulations, and CMS guidance; and 

interviewed CMS and state officials.

What GAO Recommends

GAO recommends that the CMS 

Administrator increase efforts to 

ensure that states are clearly reporting 

overpayments identified by federal 

audits in the designated location of the 

CMS-64 form. HHS concurred with this 

recommendation.

What GAO Found

States recovered $9.8 million in Medicaid overpayments, but they did not clearly 

report the overpayments and the return of the federal share to the Centers for 

Medicare & Medicaid Services (CMS) within the Department of Health and 

Human Services (HHS). Federal audits initially identified about $20.4 million in 

potential Medicaid overpayments across the 19 states with identified 

overpayments from June 2007 through February 2012. Of the $13.3 million in net 

overpayments shown below, states recovered $9.8 million and were in the 

process of recovering the remaining $3.5 million. States should have reported the 

return of the federal share for $13.3 million on the line designated for 

overpayments identified by national audit program contractors on the CMS-64—

the form that states fill out quarterly to obtain federal reimbursement for Medicaid 

services. However, states made multiple reporting errors. Specifically:

• instead of reporting $13.3 million, states reported the return of the federal 

share for $12.4 million and did not report the return of the federal share for 

the remaining $855,000; and

• within the $12.4 million that was reported by states, $6.6 million was correctly 

reported on the CMS-64, while the remaining $5.8 million was reported on 

the CMS-64, but not on the correct line.

Overview of Potential Medicaid Overpayments, Reductions, and Recoveries

CMS generally reviewed states’ reporting of overpayments but was not always 

aware of incomplete reporting. All 7 of the CMS regional offices GAO spoke with 

indicated that reviewing states’ reporting of the return of the federal share of 

overpayments was a routine part of their quarterly review of the CMS-64 and 

helped ensure the timely return of the federal share of overpayments in 59 of the 

89 audits GAO reviewed. In some cases, though, regional offices were not 

always aware that states’ reporting was incomplete. CMS’s Medicaid Integrity 

Group may review data from these audits on the designated line of the CMS-64, 

which can be an important gauge for measuring the effectiveness of CMS’s 

efforts to reduce improper payments. However, reviewing these data would not 

yield a clear picture of the return of the federal share of overpayments given the 

errors GAO identified in state reporting.

View GAO-14-25. For more information, 

contact Carolyn L. Yocom at (202) 512-7114 

or yocomc@gao.gov.
 

Page i GAO-14-25 Medicaid Overpayments

Letter 1 

Background 4

States Recovered $9.8 Million in Medicaid Overpayments, but Did 

Not Clearly Report the Overpayments and the Return of the 

Federal Share to CMS 6

CMS Generally Reviewed States’ Reporting of Overpayments, but 

Was Not Always Aware of Incomplete Reporting 10

Conclusions 12

Recommendations 12

Agency Comment 12

Appendix I Medicaid Overpayments Identified by Federal Audits 

Conducted June 2007 through February 2012 14

Appendix II Comments from the Department of Health and Human 

Services 15

Appendix III GAO Contact and Staff Acknowledgements 17

Related GAO Products 18

Figures

Figure 1: CMS and State Roles in Identifying, Recovering, and 

Reporting Medicaid Overpayments 6

Figure 2: Overview of Potential Medicaid Overpayments, 

Reductions, and Recoveries from Federal Audits 

Conducted June 2007 through February 2012 7

Figure 3: States’ Reporting of the Return of the Federal Share 

from Audits Conducted June 2007 through February 

2012 9

Contents
 

Page ii GAO-14-25 Medicaid Overpayments

Abbreviations

CMS Centers for Medicare & Medicaid Services

DRA Deficit Reduction Act of 2005

FAR Final Audit Report

HHS Department of Health and Human Services 

MIG Medicaid Integrity Group

NMAP National Medicaid Audit Program

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Page 1 GAO-14-25 Medicaid Overpayments

441 G St. N.W.

Washington, DC 20548

December 6, 2013

The Honorable Thomas R. Carper

Chairman

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Darrell Issa

Chairman

Committee on Oversight and Government Reform

House of Representatives

The Centers for Medicare & Medicaid Services (CMS), the federal agency 

within the Department of Health and Human Services (HHS) that 

oversees Medicaid, estimated that $19.2 billion of Medicaid’s federal 

expenditures in fiscal year 2012 involved improper payments.1 Improper 

payments include overpayments, which are any payments that should not 

have been made or were more than allowed. While states and certain 

federal entities have had long-standing roles in program integrity 

activities, such as identifying improper payments and recovering 

overpayments,2 the Deficit Reduction Act of 2005 (DRA) expanded 

CMS’s role.3

 

1

An improper payment is any payment that should not have been made or that was made 

in an incorrect amount (including overpayments and underpayments) under statutory, 

contractual, administrative, or other legally applicable requirements. This definition 

includes any payment to an ineligible recipient, any payment for an ineligible good or 

service, any duplicate payment, any payment for a good or service not received (except 

where authorized by law), and any payment that does not account for credit for applicable 

discounts. Improper Payments Elimination and Recovery Act of 2010, Pub. L. No. 111-

204, § 2(e), 124 Stat. 2224, 2227 (2010) (codified at 31 U.S.C. § 3321 note).

CMS subsequently established the National Medicaid Audit 

Program (NMAP), which uses contractors to audit state Medicaid claims.

From June 2007, when these audits began, through February 2012, 

NMAP contractors conducted over 1,500 audits and identified potential 

overpayments to health care providers of about $20.4 million in their audit 

reports.

2

State entities include Medicaid Fraud Control Units and state program integrity units, 

while other federal entities engaged in Medicaid program integrity activities include HHS’s 

Office of Inspector General and the Department of Justice.

3

See, Pub. L. No. 109-171, § 6034, 120 Stat. 4, 74-78 (2006) (codified at 42 U.S.C. 

§ 1396u-6). 
 

Page 2 GAO-14-25 Medicaid Overpayments

States are responsible for recovering overpayments identified by audits. 

Because the federal government matches states’ expenditures for most 

Medicaid services, a portion of the overpayments are federal dollars that 

states must return to CMS. States return the federal share by reporting 

the overpayment amount on the CMS-64—a form that states fill out 

quarterly to obtain federal reimbursement for services provided under the 

Medicaid program.4

Our recent work identified limitations in the effectiveness of NMAP audits 

and instances where states may have under-reported the recovery of 

overpayments.5

1. states recovered Medicaid overpayments identified by federal audits 

and reported the return of the federal share, and

To follow-up on our recent work, you asked us to 

examine states’ efforts to recover and report overpayments identified by 

NMAP contractors—which we refer to as federal audits—and CMS’s 

review of state reporting. This report focuses on the extent to which:

2. CMS reviewed states’ reporting of Medicaid overpayments related to 

these federal audits.

To address both reporting objectives, we collected data on state 

recoveries and conducted structured interviews with all 19 states that had 

one or more overpayments identified by federal audits conducted from 

June 2007 through February 2012. We chose this end date because 

states should have reported the return of the federal share for their 

overpayments to CMS by March 2013 when we began our data 

collection.6

 

4

States report actual expenditures and overpayment amounts on the CMS-64. Generally 

speaking, the reported overpayments are subtracted from states’ Medicaid expenditures, 

which forms the basis for computing the federal share of program costs. Throughout this 

report, we refer to this process as reporting the return of the federal share.

We compared the data we collected from states on recoveries 

to the overpayments identified by the federal audits and to the 

overpayments reported by the states on the CMS-64. We also 

5

See GAO, National Medicaid Audit Program: CMS Should Improve Reporting and Focus 

on Audit Collaboration with States, GAO-12-627 (Washington, D.C.: June 14, 2012), and 

Medicaid Integrity Program: CMS Should Take Steps to Eliminate Duplication and 

Improve Efficiency, GAO-13-50 (Washington, D.C.: Nov. 13, 2012).

6

Generally, states have one year from the date of the final audit report to return the federal 

share, regardless of whether or not the state was successful in recovering the 

overpayment amount. See 42 U.S.C. § 1396b(d)(2)(C); 42 C.F.R § 433.312.
 

Page 3 GAO-14-25 Medicaid Overpayments

interviewed CMS headquarters staff, including the Medicaid Integrity 

Group (MIG), the main entity responsible for establishing policies for the 

NMAP and, through the contractors, conducting the federal audits; the 

Financial Management Group, which is responsible for reviewing the 

CMS-64; and the 7 CMS regional offices responsible for overseeing the

reporting of overpayments for the 19 states that had an identified 

overpayment. In addition, we reviewed relevant Medicaid Integrity 

Program laws and regulations. We also reviewed CMS guidance issued 

to states on reporting of overpayments from federal audits, including the 

CMS financial review guide on the CMS-64.7

We reviewed the state data we collected for reasonableness and verified 

whether the provider identification, overpayment amount, and audit 

report’s issuance date was consistent with overpayment data from the 

federal audits. In four instances, we found differences in the overpayment 

amount identified by the state and by the federal audits. For these 

instances, we discussed the differences with the states and CMS and 

resolved the discrepancies. Based on these checks, we determined that 

these data were sufficiently reliable for our purposes. We also performed 

checks of the CMS-64 data, and discussed these data and their internal 

controls with knowledgeable CMS officials. Because state reporting of 

overpayments on the CMS-64 was incomplete, we discuss the CMS-64’s 

data limitations in this report, but did not use these data to report states’ 

return of the federal share of overpayments.8

We conducted this performance audit from January 2013 to December

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

 

7

See The Centers for Medicare and Medicaid Services, Financial Review Guide for the 

Quarterly Medicaid Statement of Expenditures (Form CMS-64 Report), February 2012.

8

See GAO, Medicaid Integrity Program: CMS Should Take Steps to Eliminate Duplication 

and Improve Efficiency, GAO-13-50 (Washington, D.C.: Nov. 13, 2012).
 

Page 4 GAO-14-25 Medicaid Overpayments

When a contractor conducts a federal audit of claims data and identifies 

an overpayment, the contractor drafts an audit report and obtains 

comments from CMS, the provider, and the state before submitting the 

completed report to CMS. Within CMS, the MIG reviews the audit 

contractor’s submission and, when finalized, sends a final audit report 

(FAR) to the state, as well as the appropriate CMS regional office that 

oversees the state. The FAR identifies the total overpayment amount paid 

to the provider and specifies the amount of the federal share of that 

overpayment the state must return.9

To initiate recovery of the overpayment, the state sends a demand letter 

to the provider indicating the amount due as identified in the FAR.

Providers may opt to appeal the findings in the FAR, thus initiating an 

appeals process that is determined by each state and is subject to the 

state’s Medicaid program requirements.10

The state generally has one year from the date of the FAR to recover the 

overpayment from the provider before reporting the return of the federal 

share to CMS.

When the state’s appeals 

process is complete, that decision determines the final amount owed by 

the provider. This final amount may be the full overpayment, a reduced 

amount of the overpayment, or nothing.

11 Federal law requires the state to return the federal share 

of the overpayment regardless of whether the state was able to recover it, 

unless the provider has been determined to be bankrupt or out of 

business.12

 

9

The amount of the federal share varies by state. The federal government matches states’ 

expenditures for most Medicaid services using a statutory formula based on each state’s 

per capita income. Under this statutory formula, the federal government’s share of 

Medicaid expenditures—and thus, its share of reported overpayments—can range from 50 

to 83 percent.

If the overpayment is reduced through an appeals process, 

the state is only required to return the federal share for the net 

overpayment amount.

10States may also challenge the findings of a FAR by filing an appeal with the Department 

of Health and Human Services’ Appeals Board Appellate Division.

1142 U.S.C. § 1396b(d)(2)(C); 42 C.F.R. § 433.312. States must return the federal share 

of the overpayment either when it is recovered or at the end of the one-year period 

following discovery of the overpayment, whichever is earlier. 42 C.F.R. § 433.320(a). The 

discovery date for overpayments typically begins on the date of the final written notice of 

the state’s overpayment determination to the provider.

1242 U.S.C. § 1396b(d)(2)(D); 42 C.F.R. § 433.312(b).

Background
 

Page 5 GAO-14-25 Medicaid Overpayments

CMS has had a long-standing requirement that states report 

overpayments and the return of the federal share on the CMS-64. 

Beginning in fiscal year 2010, CMS initiated a more detailed reporting 

requirement to better track overpayments and the return of the federal 

share from different types of audits. As a result, CMS required states to 

report overpayments from federal audits, as well as other sources—such 

as state audit results, Medicaid Fraud Control Units, and others—on each 

of the six line items specified for each type of audit.13

CMS’s regional offices are responsible for overseeing states’ reporting of 

overpayments identified in the FARs and receive a copy of the FAR when 

it is sent to a state in its region.

The reported 

overpayments are subtracted from the states’ Medicaid expenditures, 

which forms the basis for computing the federal share of program costs.

14 The FAR alerts the regional office of its 

responsibility for ensuring that the state reports the overpayment 

identified and returns the federal share at the applicable federal match 

within one year from the date of the FAR. If the state does not return the 

federal share of an overpayment within one year, the state will be liable 

for interest on the federal share of overpayments not recovered and not 

returned.15

 

13Specifically, CMS included 6 lines related to overpayment reporting on the CMS 64.9C1, 

which is a sub-form within the CMS-64. Line 5 on this form is designated for 

overpayments identified by federal audits conducted by NMAP contractors. For the 

purposes of this report, we refer to this as line 5 of the CMS-64.

(See fig. 1.)

14CMS must ensure that state expenditures claimed for federal matching on the CMS-64 

are programmatically reasonable and allowable under federal laws, regulations, and policy 

guidance. To achieve this, CMS relies primarily on its regional offices’ financial and 

funding staff to perform quarterly reviews and validate state entries on the CMS-64. The 

10 regional offices, located throughout the country, validate and audit the reported 

expenditure data and accompanying detailed information each quarter in their respective 

states.

1542 C.F.R. § 433.320(a)(4). If the state does not return the federal share of an 

overpayment within one year, CMS issues a demand letter requesting the immediate 

return of the federal share. If the state still does not return the federal share, CMS then 

issues a disallowance—which is a letter that specifies, among other things, the amount 

that is not allowed and the reason for this determination—to the state for the federal share 

of the overpayment. The state will be liable for interest at the Current Value of Funds 

Rate, which will accrue beginning on the day after the end of the one year period following 

discovery of the overpayment until the last day of the quarter for which the state submits a 

CMS-64 report returning the federal share of the overpayment. 
 

Page 6 GAO-14-25 Medicaid Overpayments

Figure 1: CMS and State Roles in Identifying, Recovering, and Reporting Medicaid Overpayments

Federal audits conducted from June 2007 through February 2012 initially 

identified $20.4 million in potential Medicaid overpayments across 19 

states, an amount that was reduced by $7.1 million, primarily due to 

successful provider appeals and settlements. Of the remaining 

$13.3 million in net overpayments, states recovered $9.8 million in 

overpayments as of March 2013, and state officials told us that they are in 

the process of recovering the remaining $3.5 million. (See fig. 2.) 

(Appendix I summarizes the potential Medicaid overpayments identified 

by federal audits, net overpayments, and state recoveries.)

States Recovered 

$9.8 Million in 

Medicaid 

Overpayments, but 

Did Not Clearly 

Report the 

Overpayments and 

the Return of the 

Federal Share to 

CMS
 

Page 7 GAO-14-25 Medicaid Overpayments

Figure 2: Overview of Potential Medicaid Overpayments, Reductions, and Recoveries from Federal Audits Conducted June 

2007 through February 2012

Of the $7.1 million in overpayment reductions, state officials told us that 

successful provider appeals and settlements accounted for $6.9 million of 

that total; the remaining overpayment reductions—approximately 

$186,000—represented overpayments that states had already identified 

and recovered or were overpayments that could not be recovered due to 

the provider filing for bankruptcy. State officials told us that appeals may 

be successful for a number of reasons. For example, in one state, 

providers successfully demonstrated that state law did not preclude them 

from receiving payments for services provided to Medicaid patients, even 

though they were not approved Medicaid providers. In another state, 

providers successfully appealed an audit’s finding that services were not 

medically necessary.

The $9.8 million in recovered overpayments represented full recoveries in 

15 of the 19 states we reviewed. Officials in the remaining 4 states told us 

they were in the process of recovering $3.5 million in overpayments, 

accounting for the remainder of the $13.3 million in net overpayments.

Medicaid overpayments may be recovered by offsetting a provider’s 

subsequent Medicaid reimbursements against the balance due to the 
 

Page 8 GAO-14-25 Medicaid Overpayments

state, and officials in 3 states told us that, as a result, certain providers 

had not yet paid the full amounts owed. In the fourth state, officials told us 

that the overpayments had not been fully recovered for several reasons, 

including that (1) some providers had not provided full payment, (2) there 

were pending appeals, and (3) in one case, state officials were unable to 

confirm the receipt of the FAR from CMS. As a result, the state had not 

initiated the recovery process.

States should have reported the return of the federal share for 

$13.3 million on line 5 of the CMS-64, the line designated for 

overpayments identified by federal audits.16

• Instead of reporting $13.3 million, states reported the return of the 

federal share for $12.4 million, and did not report the return of the 

federal share for the remaining $855,000.

Based on data we collected 

from the states, we found that states made multiple errors reporting the 

return of the federal share for overpayments identified by federal audits, 

as detailed below.

• Within the $12.4 million that was reported by states, $6.6 million was 

correctly reported on line 5 of the CMS-64, while the remaining 

$5.8 million was reported in the CMS-64, but not on line 5. (See 

fig. 3.)

 

16States generally have one year from the date of the final audit report to report the return 

of the federal share. Thus, the full $13.3 million should have been reported, regardless of 

pending appeals or states’ ability to collect the overpayments from providers.
 

Page 9 GAO-14-25 Medicaid Overpayments

Figure 3: States’ Reporting of the Return of the Federal Share from Audits Conducted June 2007 through February 2012

a

CMS requires states to report overpayments from federal audits on line 5 of the CMS 64.9C1, a subform within the CMS-64.

In addition to incomplete and inconsistent reporting of the return of the 

federal share, we identified errors in states’ reporting. In particular, states 

included $20.2 million in overpayments on line 5 of CMS-64 that were not 

related to federal audits. This $20.2 million represented errors by 

4 states,17

Officials provided several reasons for states’ errors in reporting 

overpayments, including not understanding CMS’s reporting 

requirements, frequent state staff turnover, and not being able to identify 

and, therefore, correctly report overpayments that resulted from federal 

one of which was a $20 million error made by 1 state.

 

17Two of the 4 states that made errors were not part of the 19 states in our review. These 

2 states reported overpayments on line 5 of the CMS-64 even though they had not 

received a FAR.
 

Page 10 GAO-14-25 Medicaid Overpayments

audits.18 State officials told us that about $568,000 of the unreported 

overpayments would be reported by June 2013.

All 7 of the CMS regional offices we spoke with indicated that reviewing 

state reporting of the return of the federal share of overpayments was a 

routine part of their quarterly review of the CMS-64. Regional office 

officials noted that they review state documentation for the amounts 

entered on the form and check them against the FAR to make sure that 

states accurately report the return of the federal share. This review is also 

specifically noted as a required step in the CMS Financial Review Guide, 

which regional office financial analysts must follow when verifying state 

entries on the CMS-64.19

As part of their reviews, regional office officials noted that when they 

receive a FAR for one of the states in their region they follow-up with the 

state to make sure the state is aware of the FAR and the timeframes for 

returning the federal share. As a result of these efforts, CMS’s regional 

offices helped ensure the timely return of the federal share for most 

overpayments. For 59 of the 89 audits we reviewed, states reported the 

return of the federal share of the overpayment within 1 year as required 

by federal law. This on-time reporting of the return of the federal share 

represented $9.8 million out of $13.3 million in net overpayments related 

to federal audits. For the remaining 30 audits that states did not report the 

Regional office officials also said that they work 

with states to improve reporting of overpayments on line 5 on the CMS64, but there was some variability in how the regional offices required 

states to correct errors in their reporting. For example, some regional 

offices verified the overpayment reported on lines other than line 5 of the 

CMS-64 and encouraged states to report appropriately in the future, while 

other regional offices required states to make a correction for the quarter 

in which the error appeared.

 

18In 2009 and 2011, CMS provided training to the states on how to correctly report 

overpayments from the federal audits. Additionally, CMS began including instructions in 

FARs issued in 2010 on correct reporting and issued additional reporting guidance to 

states in early 2012.

19CMS financial analysts verify that the amounts entered by the state were entered in 

accordance with required timeframes and correspond to the amounts specified in the 

FARs sent to the states. Centers for Medicare & Medicaid Services, Financial Review 

Guide for the Quarterly Medicaid Statement of Expenditures (Form CMS-64 Report), 

February 2012.

CMS Generally 

Reviewed States’ 

Reporting of 

Overpayments, but 

Was Not Always 

Aware of Incomplete 

Reporting
 

Page 11 GAO-14-25 Medicaid Overpayments

return of federal share within 1 year, $2.7 million was reported late and 

$855,000 was not reported at all.20

However, in some cases, regional offices were not always aware that 

states’ reporting was incomplete.

• In one regional office, the CMS analyst charged with reviewing a 

particular state’s CMS-64 was unaware that the state did not report 

returning the federal share from several FARs.21

• In another regional office, it was unclear if the office had received 

copies of the numerous FARs that a particular state in its region had 

received in 2011 and 2012. Thus, the regional office was not aware of 

the need to look for these overpayments and the return of the federal 

share on the CMS-64.

In these two cases, MIG officials were aware of the FARs but the regional 

offices were not. Additionally, the MIG does not regularly follow-up with 

the regional offices on the status of overpayments in light of CMS’s 

approach to divide responsibility related to state recovery and reporting of 

overpayments. Rather, the MIG interacts with the offices as needed.22

 

20Among the seven states that were late in reporting their return of the federal share, the 

delay ranged from one quarter to nearly two years.

MIG officials acknowledged that at the beginning of the audit program, 

they had more contact with the regional offices on state recovery efforts.

But such direct follow-up was not continued since the MIG may review 

data on line 5 of the CMS-64, enabling them to check the status of state 

overpayments directly, according to two regional office officials. However, 

given the errors we identified on the CMS-64, checking the status of state 

reporting of overpayments based on the reported CMS-64 data would not 

always yield a clear picture of states’ reporting of the federal share of 

overpayments.

21The CMS analyst noted significant difficulties obtaining the information needed to verify 

entries on the state’s CMS-64, as well as the recent turnover of state staff charged with 

reporting duties for the CMS-64. State officials indicated they were waiting for the results 

of appeals before initiating their recovery efforts on some of the overpayments—an 

approach that is inconsistent with CMS’s requirements and policy requiring that returns be 

reported within one year of the audit findings, regardless of whether appeals are pending.

22Regional office officials told us that they had contacted the MIG when there was an 

issue with the state, such as an appeal, or when the state reported an overpayment 

amount that was less than the amount identified on the FAR.
 

Page 12 GAO-14-25 Medicaid Overpayments

CMS’s audit approach for identifying Medicaid overpayments has shown 

some success in that states have returned most of the federal share of 

net overpayments—often within the one-year timeframe. However, state 

errors in reporting overpayments in the proper location of the CMS-64 

prevent CMS from having a full understanding of the extent to which the 

federal share has been returned from the audits that they conduct. 

Officials in the regional offices play a critical role in reviewing and 

assisting states in reporting, and they are well positioned to ensure that 

states correctly report overpayments and the return of the federal share.

Additionally, a full accounting of federal audit recoveries is an important 

gauge for measuring the effectiveness of CMS’s efforts to reduce 

improper payments, but states’ reporting of overpayments and the return 

of the federal share are not always clear or complete. Gaps such as these 

hamper federal efforts to quantify the results of state and federal 

activities, and make it difficult to determine the extent to which states are 

returning the federal share of these overpayments.

To ensure the timely return of the federal share of Medicaid 

overpayments, the CMS Administrator should increase efforts to ensure 

that states are clearly reporting overpayments identified by federal audits 

on the designated location of the CMS-64 form.

We provided a draft of this product to HHS for comment. In its written 

comments, reproduced in appendix II, HHS concurred with our 

recommendation and noted that CMS will increase efforts to ensure that 

states correctly report overpayments on the CMS-64 by providing 

additional training to states and regional offices on accurate reporting and 

improve internal processes to ensure timely resolution of incorrect 

reporting. HHS also provided technical comments that we incorporated, 

as appropriate.

Conclusions

Recommendations

Agency Comment
 

Page 13 GAO-14-25 Medicaid Overpayments

We are sending copies to the Secretary of Health and Human Services, 

the Administrator of CMS, and the appropriate congressional committees. 

In addition, the report is available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff has any questions about this report, please contact me 

at (202) 512-7114 or at yocomc@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in Appendix III.

Carolyn L. Yocom

Director, Health Care
Appendix I: Medicaid Overpayments Identified 

by Federal Audits Conducted June 2007 

through February 2012

Page 14 GAO-14-25 Medicaid Overpayments

State 

(number of audits) Potential overpayments Net overpayments State recoveries

AR (15) $489,966 $488,996 $130,862

CA (2) $1,196,634 $1,196,634 $186,054

CO (1) $2,376 $2,376 $2,376

DC (4) $1,711,520 $1,575,476 $1,575,476

DE (6) $4,614,912 $4,614,912 $4,614,911

FL (21) $1,789,559 $597,347 $597,348

IA (1) $31,875 $31,875 $31,875

KY (1) $9,445 $9,445 $9,445

MD (3) $2,944,875 $484,601 $484,601

MS (10) $5,731,435 $3,042,697 $1,011,869

NE (1) $25,165 $25,165 $25,165

NM (1) $14,821 $14,821 $14,819

PA (1) $4,856 $4,856 $4,856

SC (5) $92,535 $77,934 $77,934

SD (1) $90,465 $90,465 $90,465

TX (5) $795,484 $650,605 $567,743

UT (1) $27,521 $27,521 $27,521

VA (2) $40,005 $40,005 $40,005

WA (8) $821,529 $324,522 $324,522

Total $20,435,009 $13,301,254 $9,817,848

Source: GAO analysis of Centers for Medicare & Medicaid Services and state information.

Appendix I: Medicaid Overpayments 

Identified by Federal Audits Conducted June 

2007 through February 2012
Appendix II: Comments from the Department 

of Health and Human Services

Page 15 GAO-14-25 Medicaid Overpayments

Appendix II: Comments from the Department 

of Health and Human Services
Appendix II: Comments from the Department 

of Health and Human Services

Page 16 GAO-14-25 Medicaid Overpayments
Appendix III: GAO Contact and Staff 

Acknowledgements

Page 17 GAO-14-25 Medicaid Overpayments

Carolyn L. Yocom, (202) 512-7114 or yocomc@gao.gov

In addition to the named above, key contributors to this report 

were: Rashmi Agarwal, Assistant Director; Walter Ochinko, 

Assistant Director; Sarah Harvey; Drew Long; JoAnn Martinez-Shriver; 

and Jennifer Whitworth.

Appendix III: GAO Contact and Staff 

Acknowledgements

GAO Contact

Staff 

Acknowledgements:
Related GAO Products

Page 18 GAO-14-25 Medicaid Overpayments

GAO, Medicaid Integrity Program: CMS Should Take Steps to Eliminate 

Duplication and Improve Efficiency, GAO-13-50 (Washington, D.C.: 

Nov. 13, 2012).

National Medicaid Audit Program: CMS Should Improve Reporting and 

Focus on Audit Collaboration with States, GAO-12-814T (Washington, 

D.C.: June 14, 2012).

National Medicaid Audit Program: CMS Should Improve Reporting and 

Focus on Audit Collaboration with States, GAO-12-627 (Washington, 

D.C.: June 14, 2012).

Program Integrity: Further Action Needed to Address Vulnerabilities in 

Medicaid and Medicare Programs, GAO-12-803T (Washington, D.C.: 

June 7, 2012).

Medicaid: Federal Oversight of Payments and Program Integrity Needs 

Improvement, GAO-12-674T (Washington, D.C.: April 25, 2012).

Medicaid Program Integrity: Expanded Federal Role Presents Challenges 

to and Opportunities for Assisting States, GAO-12-288T (Washington, 

D.C.: Dec. 7, 2011).

Fraud Detection Systems: Additional Actions Needed to Support 

Program Integrity Efforts at Centers for Medicare and Medicaid Services, 

GAO-11-822T (Washington, D.C.: July 12, 2011).

Fraud Detection Systems: Centers for Medicare and Medicaid Services 

Needs to Ensure More Widespread Use, GAO-11-475 (Washington, D.C.: 

June 30, 2011).

Improper Payments: Recent Efforts to Address Improper Payments and 

Remaining Challenges, GAO-11-575T (Washington, D.C.: April 15, 2011).

Status of Fiscal Year 2010 Federal Improper Payments Reporting, 

GAO-11-443R (Washington, D.C.: March 25, 2011).

Medicare and Medicaid Fraud, Waste, and Abuse: Effective 

Implementation of Recent Laws and Agency Actions Could Help Reduce 

Improper Payments, GAO-11-409T (Washington, D.C.: March 9, 2011).

Related GAO Products
Related GAO Products

Page 19 GAO-14-25 Medicaid Overpayments

Medicare: Program Remains at High Risk Because of Continuing 

Management Challenges, GAO-11-430T (Washington, D.C.: 

March 2, 2011).

Opportunities to Reduce Potential Duplication in Government 

Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP

(Washington, D.C.: March 1, 2011).

High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: 

February 2011).

Medicare Recovery Audit Contracting: Weaknesses Remain in 

Addressing Vulnerabilities to Improper Payments, Although 

Improvements Made to Contractor Oversight, GAO-10-143. 

(Washington, D.C.: March 31, 2010).

Medicaid: Fraud and Abuse Related to Controlled Substances Identified 

in Selected States, GAO-09-1004T (Washington, D.C.: Sept. 30, 2009).

Medicaid: Fraud and Abuse Related to Controlled Substances Identified 

in Selected States, GAO-09-957 (Washington, D.C.: Sept. 9, 2009).

Improper Payments: Progress Made but Challenges Remain in 

Estimating and Reducing Improper Payments, GAO-09-628T

(Washington, D.C.: April 22, 2009).

Medicaid: Thousands of Medicaid Providers Abuse the Federal Tax 

System, GAO-08-239T (Washington, D.C.: Nov. 14, 2007).

Medicaid: Thousands of Medicaid Providers Abuse the Federal Tax 

System, GAO-08-17 (Washington, D.C.: Nov. 14, 2007).

Medicaid Financial Management: Steps Taken to Improve Federal 

Oversight but Other Actions Needed to Sustain Efforts, GAO-06-705

(Washington, D.C.: June 22, 2006).

Medicaid Integrity: Implementation of New Program Provides 

Opportunities for Federal Leadership to Combat Fraud, Waste, and 

Abuse, GAO-06-578T (Washington, D.C.: March 28, 2006).

Medicaid Fraud and Abuse: CMS’s Commitment to Helping States 

Safeguard Program Dollars Is Limited, GAO-05-855T (Washington, D.C.: 

June 28, 2005).
Related GAO Products

Page 20 GAO-14-25 Medicaid Overpayments

Major Management Challenges and Program Risks: Department of 

Health and Human Services, GAO-03-101 (Washington, D.C.: 

January 2003).

(291108)
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